S&P 500 price

Discussion in 'ETFs' started by Hilcrest_trader, Jul 14, 2022.

  1. Maybe a silly question - but what drives the S&P price? Is it the aggregate price of all the underlying stocks or is it trading in the ETF itself? Maybe is a combination of the two?
     
    murray t turtle likes this.
  2. S&P index + arbitraging all the derivatives.
     
    jys78 and murray t turtle like this.
  3. The S&P is the index representing essentially all the broad companies. You answered your own question. It's basically USA.

    The Billion dollar question, of course, though, is HOW will it Move,
    People fantasize about this. They turn to amulets, the stars, their cat, social media for answers. All fail.
     
  4. Jzwu2017

    Jzwu2017

    I would reckon S&P500 index price moves with the underlying stocks, same as if you buy 500 different stocks in your account and your account value/balance changes every day with those 500 stocks.
     
  5. ET180

    ET180

    Fed and fiscal policy are the ultimate drivers of the price of stocks which make up the S&P500. Secondary factor is corporate buybacks.
     
    murray t turtle and nooby_mcnoob like this.
  6. reqouting (financial engineering through spreads across asset classes derivatives) for as long as someone is willing to buy high or sell low.
     
  7. SPX moves per buying/selling in the individual stocks... and you can't buy the SPX.

    When money flows into/out of SPY, the ETF manager buys and sells stocks in the SPX. But the amount of flow into the ETF is very small compared to the total amount of flow into the individual SPX stocks. So... theoretically money flowing into SPY could move the index a very small amount.
     
    Last edited: Jul 15, 2022
    LuckyMac and murray t turtle like this.
  8. SunTrader

    SunTrader

    Bet most don't know - S&P 500 is almost always more than 500 symbols.

    "Although called the S&P 500, the index contains 503 stocks because it includes two share classes of stock from 3 of its component companies"

    And an ever more glaring number example in the opposite direction is the Wilshire 5000, it currently has 3,637 stocks.

    As for what moves index, of course stonks traders never think the futures contracts might have something to do with it.
     
    murray t turtle likes this.
  9. I still don't get how AAPL gets repriced when futures move up or down overnight.
     
    murray t turtle likes this.
  10. SunTrader

    SunTrader

    Not that hard really.

    Say, as every stock does AAPL reports earnings after the bell (don't know when they will or if they have already) and they are better than expected. AAPL reprices in AF trading.

    So since futures are based off of stock price expectations in the future if the markets believes, even if is it turns out to be erroneous in retrospect, AAPL and other stocks cumulatively should be higher then higher they will go.

    Look into fair value/arbitrage/program trading/etc.
     
    #10     Jul 15, 2022